Eisner Loses Fund's Support

Nappier Joins Movement Against Disney Chief

February 27, 2004|By MATTHEW LUBANKO; Courant Staff Writer

The state of Connecticut's pension fund, joining pension fund managers in other states, announced Thursday that it will withhold its vote to re-elect Michael D. Eisner as Walt Disney Co.'s chairman and chief executive.

``Investors must cut through the antagonism, mixed signals and competing interests'' at Disney, said Connecticut Treasurer Denise L. Nappier in a prepared statement Thursday. Disney is the parent of the ESPN all-sports cable TV network, which has headquarters in Bristol. Disney is also the target of a $54 billion takeover offer submitted Feb. 11 by Comcast Corp.

By publicly declaring Thursday it would cast what some regard as a ``no confidence'' vote for Eisner, Connecticut joined pension plans from Massachusetts, New York, New Jersey, Virginia and California. The pension plans from Connecticut and those five states collectively hold about 1.9 percent of Disney's 2.04 billion shares.

Nappier, as state treasurer, controls 534,000 shares. Two years ago, at the Disney annual meeting in Hartford, she squared off against Eisner on the issue of auditor independence.

Thursday's announcements came six days before Disney's annual shareholders meeting, to be held March 3 in Philadelphia. Only after that meeting begins will shareholders and observers learn the complete outcome of the vote.

As long as Eisner receives at least one vote for re-election, Disney's board of directors is under no legal obligation to replace him with a new leader. But if other large institutional shareholders withhold votes for Eisner, Disney's board of directors would be hard-pressed to resist calls for change at the top, one expert on corporate governance said.

``Twenty percent or more of the votes withheld would send a pretty powerful message. A board of directors that ignores a substantial no confidence vote would need to do some serious self-examination,'' said Charles M. Elson, a professor and corporate governance expert at the University of Delaware.

The embattled Eisner has served as Disney's chief executive since 1984. During the first 10 years of his tenure, he was credited with reviving a moribund company that drifted aimlessly for almost two decades after founder Walt Disney died in 1966. But in recent years, disgruntled shareholders -- including Roy Disney, the founder's nephew -- have blamed Eisner for the company's sluggish performance.

In the 10-year period that ended Jan. 31, shares of Disney have delivered an average annual total return of 5.1 percent. During that same 10-year time frame, the Standard & Poor's 500 index rewarded investors with a 10.9 percent annual total return.